The Interdependence of Hierarchical Institutions: Federal Regulation, Job Creation, and the Moderating Effect of State Economic Freedom

  title={The Interdependence of Hierarchical Institutions: Federal Regulation, Job Creation, and the Moderating Effect of State Economic Freedom},
  author={David S. Lucas and Christopher John Boudreaux},
  journal={arXiv: General Economics},
Regulation is commonly viewed as a hindrance to entrepreneurship, but heterogeneity in the effects of regulation is rarely explored. We focus on regional variation in the effects of national-level regulations by developing a theory of hierarchical institutional interdependence. Using the political science theory of market-preserving federalism, we argue that regional economic freedom attenuates the negative influence of national regulation on net job creation. Using U.S. data, we find that… Expand

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